Canada small businesses need more funding options - TMX's Kloet

TORONTO Tue May 27, 2014 2:51pm EDT

TORONTO May 27 (Reuters) - Departing Toronto Stock Exchange chief Tom Kloet called on Tuesday for more access to capital for Canada's million-plus small, private companies.

"What they need to succeed is capital, which is the lifeblood of a growing company," Kloet said in remarks prepared for delivery to the Economic Club of Canada.

He said the domestic exchange industry needs to offer an array of funding options to support the country's smaller businesses, including crowdfunding and private exempt markets.

Kloet's comments come several months after the company launched TSX Ignite, a push to introduce small companies to suitable investors.

Kloet will step down as TMX CEO once a replacement is found, after he oversaw the company's acquisition several years ago by a group of Canadian financial institutions and the addition of a small exchange and a clearinghouse.

The company will in June migrate its main index, the Toronto Stock Exchange, onto its latest trading engine, TMX Quantum XA.

The upgrade is expected to allow speedy transactions with median latency of less than 30 microseconds, compared with latency of more than 2 milliseconds (2000 microseconds) previously.

The new system will prove tempting for high-speed traders looking to arbitrage cross-listed pricing variance. It is already running on TMX Select, an alternative trading system designed for such high-frequency traders.

TMX is threatened by the likely emergence of a rival exchange from Aequitas Innovations Inc, which last year outlined plans to launch a trading platform for private securities to raise capital for small and mid-sized issuers.

The Aequitas model also aims to limit high-frequency trading strategies, which have proved controversial across North America as they make up an increasing amount of overall trading volume. (Reporting by Alastair Sharp; Editing by Dan Grebler)